the tax lady:  You blew it. There is no such thing as "under the table." They got caught, so now you do too. You *can* limit the damage a little if you file form SS-8 with the IRS and then respond to the CP2000 with a form 8919. That way you don't pay the employer's share of the fica/mc. ($383 vs $706 and since that's 55%, it would reduce the penalties and interest too.) Nannies who work in the home of their charges are employees, not contractors.
2010-06-17 10:28:07

Max Hoopla:  If you were a nanny, you were a household employee whose wages should have been reported on your employer's Form 1040 using Schedule H (as in Household.) The employer is obligated to withhold FICA and Medicare taxes but not income tax. The best you can do is respond that you were misclassified and show your wages on IRS Form 8919 which will make you liable for the employee half of Social Security and Medicare taxes and income tax. Other than that your choices are phillips or slotted.
2010-06-17 10:39:24

Judy:  Obviously an agreement to do something illegal can't be enforced. Sounds like they reported the info for a dependent care deduction, and that's how you got caught for trying to cheat on your taxes. It's possible you should have been treated as an employee rather than an independent contractor (1099) in which case you could avoid half of the self-employment tax (they'd owe that, not you) but you'd still owe the income tax and 7.65% for social security and medicare, plus whatever penalties and interest have accrued in that time.
2010-06-17 23:44:12

jlf:  You don't "do a 1099 yourself." Obviously, THEY "did a 1099." And an "agreement" with them doesn't means squat. You cheated and got caught, I'm afraid.
2010-06-18 07:33:43

Mathew:  While there are a number of things you can do, most just continue the fraud you and the "employer" started while you were working "under the table". It would be best to accept the offer and start making payments. It will only get worse if you don't.
2010-06-18 17:26:23

StephenWeinstein:  Nothing after the sentence until "I made around $5000" makes any difference. If you were paid money for doing any type of work, then you must pay tax, no matter what else did or did not happen. Your agreement does not matter. What the family said to do does not matter. Whther you received any forms from the family does not matter. Two years does not matter. The IRS always has at least three years, and sometimes longer. Even if the family said not to do the 1099, you would still be required to pay the tax. You must pay tax on all money that you make, especially if there is an agreement for it to be paid under the table. In some cases, you can avoid paying tax if there is not an agreement for it to be paid under the table, for example, by contributing it to a 401K retirement plan, but that does not work if there is an agreement for it to be paid under the table. You do not have to do anything because the family said to do it. You have to do it because, years before you started working for the family, the Congress of the United States of America said you must either do it or refuse to work for the family.
2010-06-19 09:56:36